Transportation Fuel Supply
Motor gasoline and diesel fuel will continue to be the main sources of power for cars and trucks in the near future. In 2006, motor gasoline accounted for 74 percent of fuel used in highway vehicles, and diesel accounted for 24 percent (alternative fuels made up the remainder). Diesel cars and light trucks are uncommon in the United States—only 2 percent of new cars and light trucks sold use diesel engines; the majority of diesel fuel is used by commercial vehicles.
Ethanol, an alternative fuel, is currently used as an additive in gasoline to increase octane and help gasoline burn more completely, reducing emissions of carbon monoxide and other pollutants. In many states and metropolitan areas, gasoline sold at the pump contains between 2 and 10 percent ethanol, depending on State requirements. Using such alternatives to oil can reduce the environmental costs of transportation as well as the national security consequences of oil use. To further encourage alternative fuel use, a provision in the Energy Policy Act of 2005 (EPAct 2005) known as the Renewable Fuel Standard requires a certain quantity of renewable fuel to be used by gasoline producers each year. In 2006, producers were obligated to use 4 billion gallons per year; this obligation will gradually increase to 7.5 billion gallons in 2012 (Americans consumed about 140 billion gallons of motor gasoline in 2006). One of the strengths of this policy is that it does not choose which renewable fuel to promote, but allows the standard to be met with any renewable fuel that accomplishes the goal of reducing oil use. However, it does not extend to oil alternatives beyond renewable fuels, such as electric cars or hydrogen fuel cells. The Renewable Fuel Standard also allows imports to satisfy the standard, allowing U.S. consumers to take advantage of cheaper production of renewable fuels in other countries, although this is impeded by an import tariff on such fuels.
A more significant regulatory change has been applied to diesel fuel. Starting in 2006, diesel fuel sold in the United States is required to have a sulfur content of no more than 15 parts per million (ppm), down from 500 ppm in the previous standard. This reduction results in the most stringent diesel fuel standard in the world and enables U.S. consumers to purchase vehicles with engines that meet clean air requirements using clean diesel fuel. Diesel engines are between 20 and 25 percent more fuel efficient than comparable gasoline engines (even accounting for the fact that a gallon of diesel contains more energy than a gallon of gasoline). EPAct 2005 also grants tax credits to buyers of diesel cars that meet stringent emission standards.